The EY Sustainable Value Study suggests that while investment has enabled many businesses to progress on sustainability, this period of early wins is ending. The survey of over 500 chief sustainability officers (CSOs) indicates business progress is slowing at a stage when climate action is critical to achieving our climate goals. The research shows a decline in the average number of actions businesses have completed as part of their climate strategy and further delays in the target year to achieve their climate plans.
There has also been a notable increase in businesses taking few measures to address climate change and a widening gap in sustainability-based investments and emission reductions compared to companies taking the most action. Despite these findings, most sustainability executives are still confident, with over 60% feeling their business is doing enough to make a meaningful impact on climate change. For organisations that are driving change, the benefits can deliver significant value. Companies taking the most action are more likely to secure higher financial value from climate plans. Empowering CSOs to be drivers of transformation by working with business leaders is critical.
While a separate study of CFOs suggested that sustainability measures are considered a long-term investment priority, they are also the most likely to be cut or paused to achieve short-term earning goals. The existing geopolitical conditions, rising inflation and pressure on supply chains have caused more businesses to adjust their climate plans over the last year.
CSOs have played a significant role in strengthening sustainability on corporate agendas. Studies clearly show that companies with a CSO are more committed to sustainability, create more ambitious emission targets and achieve higher emissions reduction, compared to other organisations. More work is needed, but CSOs cannot achieve this alone. They need to empower the whole C-Suite to drive change, build value and generate results.
The role of the CSO has become very strategic, prioritising sustainable value creation. CSOs focus on determining the sustainability issues having a big impact on financial performance and the risk profile of an organisation. The lack of collaboration across the business and slow level of progress impacts the overall satisfaction of CSOs. In a separate study, only 17% of CSOs said they were highly satisfied with their role. This figure is concerning as it could impact further progress in the ongoing planning of sustainability measures.
The challenge for CSOs
Aside from the existing economic and geopolitical conditions impacting progress, CSOs often find there in an organisation that prioritises short-term goals and results. Only a little over 50% of respondents stated that they can hold C-Suite members accountable for their performance on sustainability measures. This means CSOs are often considered responsible for achieving corporate climate goals, but their business leaders are not necessarily accountable to them for achieving the results of climate action.
Transformational CSOs
The required skills for a CSO are changing. You don’t want an independent sustainability strategy and a business strategy – you need a sustainable business strategy. Transformational CSOs are those empowered by the CEO to work as transformational leaders. Compared to other CSOs, these members have more resources available and can influence other team members.
Today’s CSO plays a significant role in building the company strategy and actively working with shareholders, investors and customers. Businesses must continue progressing with their sustainability plans if they are to achieve the necessary climate goals. Those businesses led by transformational CSOs can deliver the most progress and the greatest value from their sustainability plans.
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